GBP/USD Price Forecast – British pound pulls back

The British pound fell a bit during the trading session on Wednesday, as the 1.28 level continues to cause a lot of headaches for buyers. Ultimately, I think it’s likely that we will continue to see this market pull back because quite frankly the Brexit hasn’t gone anywhere. However, there is a little bit of hope just below.
Christopher Lewis
GBP/USD daily chart, January 09, 2019

The British pound pulled back a bit during the day on Wednesday, reaching towards the 50 day EMA as I record this video. However, it shouldn’t be much of a surprise to hear that the 1.27 level is an area of focus in the market yet again. This is an area that was massive support previously but has been shot through a couple of times recently. So now the question is whether or not it will offer support? I think it’s a bit interesting that the British pound continues to get a bit of a reprieve, because quite frankly there is so much uncertainty when it comes to the Brexit and how Parliament will vote that it’s hard to be confident owning the British pound for the long term.

GBP/USD Video 09.01.19

With that being said, if we break down below the 1.27 level, I think there is an argument to be made for shorting the market. At that point, I think a return to the 1.25 level would be reasonable to expect. The alternate scenario of course is that we turn around and make a fresh, new high, and then that should send this market looking towards the 200 day EMA above, which is the top of the previous descending triangle. That would be a very interesting move, but one that I would necessarily be quite comfortable doing. The one thing that’s probably helping this market right now as the Federal Reserve and its change in tone.

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